OPINION:
Worried about the economy? Don’t be. Here’s why.
Inflation spikes will be temporary
Everyone is worried about the impact of the Iranian war on energy prices. But even at the height of the conflict, the price of a barrel of oil rose to $112, still less than the $117 per barrel registered in 2022. Currently, it’s around $90.
The recent rise in the Producer Price Index to a 6% annual rate caused concern. But that increase was, again, mainly due to short-term energy-related spikes that have had a broad impact on products ranging from processed goods to chemicals. People worry about energy supplies. But that shouldn’t be a long-term worry, even if the war escalates.
“Non-Gulf energy producers also are pumping more,” Ken Fischer, an investment and market analyst, wrote this past week. “April U.S. oil exports hit an all-time record. Venezuela is ramping up shipping. Countries reliant on Qatari natural gas— like South Korea and Italy — are buying more from America and Australia. Asian nations are refiring coal power plants. Shortages will be short-lived.”
Yes, the price of groceries and other staples are up. But so is consumer spending. And for some reason, I’m seeing lots of people eating $40 chicken parms and drinking $25 old fashioneds. Why is that?
Personal wealth is at historic highs
Personal wealth is now at about $175 trillion, an all-time high, and up almost 80% from $98 trillion pre-COVID-19. The S&P and Dow Jones have grown 10% and 5%, respectively, in just the past five months. Markets price the future, not the past, and investors don’t see energy volatility as a long-term issue.
Most average Americans are flush with savings, which is why consumer spending continues to be strong despite all the negative “sentiment” surveys gleefully reported by the media.
Consumers keep spending
To feel better about consumer behavior, just look at what the companies that sell to consumers (our largest retailers) are saying in their latest earnings releases. Walmart, the country’s largest retailer, recently reported “strong” revenue growth, including e-commerce, which grew 26% globally with strength across segments.
Amazon said its North American sales rose 12% year over year, international sales rose 19% and unit growth in the business’ stores business reached 15%, the highest rate since the end of pandemic lockdowns. Target’s same-store sales jumped 5.6%, its first positive same-store sales number in five quarters.
Capital is strong
The prime rate is elevated, but only by about a percentage point above where it was pre-COVID-19. Our largest banks — JP Morgan Chase, Citigroup, Wells Fargo — have all recently reported increased earnings, strong balance sheets and plenty of capital available. The Small Business Administration has expanded its financing options, and its member banks are lending at a record pace.
Jobs hold steady, pay is outpacing inflation
Ignore the surveys and broken methodology of the Department of Labor and focus instead on where the real jobs data lies: with the two largest human resources and payroll companies in the country, ADP and Paychex, which have millions of employees in their systems.
This month, according to ADP, private employers added 109,000 new jobs (that’s on top of about 70,000 added the prior month). Pay increases for job stayers were at 4.4%, and for job changers, at 6.6%, both significantly higher than reported inflation. According to Paychex, the pace of job growth among U.S. small businesses (which employ half of the country’s workforce) also showed an increase in April, marking the second consecutive month of gains.
GDP is on track, and global shipping remains resilient
GDP is on track to grow at 2% this quarter, on target with the typical average GDP growth reported over the past 20 years. Global shipping — despite all the Mideast and tariff turmoil — remains strong. The Baltic Dry Index, which measures the cost of freight (and therefore shipping activity), has doubled since the beginning of the year.
Yes, a big piece is related to the cost of energy; the National Retail Federation says that port activity has been down so far this year compared to last. But as recently as March 2026, U.S. containerized imports reportedly increased 12.4% from February.
The big surprise: manufacturing
The Institute of Supply Management has reported that manufacturing has expanded in each of the past four months and at its fastest pace since 2022. As I wrote just last month, new orders for key U.S.-manufactured capital goods increased by the most in nearly six years, and shipments also rose “solidly,” suggesting that business spending on equipment helped drive economic growth in the first quarter.
Of course, there are concerns. Construction is still struggling. Businesses and nonprofits relying on government expenditures are still reeling from the Department of Government Efficiency. Lower-income consumers continue to struggle, as they always have. Excessive regulations and new taxes are holding back growth in states like California, Washington and Illinois.
Crypto, an artificial intelligence bubble or another international crisis could trigger a market decline and bring on a recession, as some are predicting. And they may not be wrong, if only because history shows we’re due for a downturn after so many years of growth.
But for the most part, the economy’s doing fine.
• Gene Marks, CPA, runs The Marks Group PC, a financial and technology consulting firm near Philadelphia.
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